GILROY—A “game changer” of a court ruling in southern California is leading Gilroy and other cities to revise their tiered water pricing schedules, spelling out higher costs for residential users and shrinking bills for large commercial and industrial users.
In the Garlic Capital, water rates are slated to rise by as much as 62 percent for some residential customers, according to a city-commissioned study formulating a water rate adjustment.
But residents will still pay less than those in surrounding communities, according to consultants who prepared the study at the direction of the Gilroy City Council.
“The lower tiers are going to pay more than they were and the higher tiers are going to be paying a little bit less,” said Doug Dove, principal consultant with Berkeley-based Bartle Wells Associates who studied the proposed increases.
The push to revise rates stems from a court decision in San Juan Capistrano that is leading municipalities across California to question whether their tiered rate structures that reward water conservation with lower bills are unconstitutional, according to Dove.
“Even with this increase, Gilroy’s rates are going to be lower than surrounding communities. Your rates are very favorable and they’re still going to be on the low end—probably the lowest in the area,” he said, noting that the increasing costs of pumping groundwater and the ongoing drought also feed the need for rate adjustments.
The average home with a ¾-inch meter uses approximately 11,000 gallons per month, but the monthly bill associated with that water usage will jump from $20.80 to $33.51, based on the adjusted rates that still need council approval before they go into effect. That amounts to an increase of $152 for the average home each year.
The city’s irrigation customers, on the other hand, will see their bills decrease if the modified rates are approved. For example, parks that consume 40,000 gallons of water monthly and have a 2-inch meter currently pay $234, but the cost will drop to about $139. Smaller commercial customers can expect to see their bills increase, while commercial customers who use more—between 30,000 and 60,000 gallons monthly—can expect significant cost savings.
But why adjust rates now?
California’s Fourth Appellate District Court of Appeal “rocked the world of water agencies” when it issued a ruling in the case of Capistrano Taxpayers Association v. City of San Juan Capistrano, one water policy expert commented. The ruling held the southern California city accountable and required that its tiered pricing reflect the actual cost of service, and not be punitive to encourage conservation.
On top of that, the tiered pricing schedule in the southern California city was declared unconstitutional.
That means water agencies cannot adjust rates to reward those who conserve water, or raise rates on high-volume users as a result of the Fourth Appellate District Court of Appeal’s ruling.
“That line of thinking seems counter-intuitive in the middle of a drought,” said Dove, “but we have to abide by the law and the San Juan Capistrano case has really been a game changer in conservation rates.”
Dozens of other California cities have since contacted BWA to conduct a water rate study, Dove added, concerned their pricing schedules might not pass muster if challenged by a higher court.
“We’ve been super busy resetting folks’ water rates, which are becoming more and more litigious than ever before in my 25 years of experience,” he said.
The city of Gilroy last raised its water rates in 2009. While many water users will feel the pain of the increases when writing bigger monthly checks to the city for water service, Dove said there is no need for residents to panic.
“Gilroy’s rates will still be lower than the cities of Morgan Hill, Watsonville, Santa Clara and Salinas,” Dove said.
Additionally, the BWA study also set the stage for slight increases in rates for Gilroy’s wastewater customers. A single-family that pays the current fixed rate of $44.42 currently for the service will need to fork over a few extra dollars, nearly $47 in July of 2016, according the adjusted rates.
Putting a ‘straitjacket on water agencies’
The city’s tiered schedule for water rates was developed in conjunction with firms like BWA to reward conservation and make those who use water excessively—well above average consumption—pay much more. Agencies saw reductions in their usage as a result, Dove noted.
When the outcome of the San Juan Capistrano case was announced in April 2015, Governor Jerry Brown said it would “put a straitjacket on the water agencies” and that it restricts the ability to encourage conservation through pricing. Brown issued an executive order that same month ordering a 25 percent slash in water usage statewide.
“As soon as the ruling came down, we were getting calls from all over the state from agencies with tiered rates wanting to review their rates and do a study,” Dove said.
On top of that, the costs for water suppliers to pull water from groundwater basins are going up significantly.
“It’s more costly than it has ever been in the past,” Dove said. Groundwater management fees are set to rise from nearly $3 million to close to $3.5 million by fiscal year 2016.
In response to the ongoing drought, now in its fourth year, Santa Clara County is doing a “great job” conserving water, according to Water District 1 Director Dennis Kennedy, who represents South County.
“From my perspective, the public is really responding well to the call for water conservation—Santa Clara County especially,” he said. “We’re trying to get out in front.”
Residents will have a chance to weigh in on the proposed rate hikes in Gilroy at a public hearing scheduled for 6 p.m. Aug. 17 at Gilroy City Hall, located at 7351 Rosanna St.
• A Gilroy residence with ¾-inch meter that uses 11,000 gallons monthly will pay nearly $34, up from $21
• The same residence, but one that uses 20,000 gallons monthly, will pay $55, up from $51
• Commercial customers with 1-inch meter consuming 20,000 gallons monthly will pay $60, up from $45
• Irrigation customers with 2-inch meter that use 40,000 gallons monthly will see their bills drop from $234 to $139
Source: City of Gilroy’s 2015 water and wastewater rate study
